Apple generated US$5.7 billion in sales in China, its priority market, in the three months to September last year. Photo: EPA

Apple plans to sell a smaller, cheaper version of the iPhone as soon as this year, said a person familiar with the plans, part of a push to gain customers in developing nations.

Apple, which has been working on a more affordable smartphone since at least February 2011, is weighing retail prices of US$99 to US$149 for a device that would debut later this year, at the earliest, according to the person, who asked not to be named because the negotiations are private. Apple had spoken to at least one of the top US wireless carriers about its plans, the person said.

Apple executives have been particularly interested in building a lower-cost model with less expensive components as a way to appeal to customers in emerging markets, another person has said.

More affordable iPhones would help Apple as it plays catch-up with smartphone manufacturers such as Samsung Electronics using Google's Android mobile software system.

Android made up 75 per cent of smartphone shipments in the third quarter, compared with 15 per cent for Apple, according to IDC.

Natalie Kerris, a spokeswoman for Apple, declined to comment. The Wall Street Journal earlier reported a cheaper iPhone might debut later this year.

Apple chief executive Tim Cook has said China is a priority. The company generated US$5.7 billion in sales in the country in the quarter to September and sold more than two million iPhone 5s during its weekend debut there last month.

Adding a less expensive version of the iPhone would be a strategy shift for Apple, which has until now tried to appeal to more budget-conscious customers by cutting the prices of older models. After introducing the iPhone 5, Apple kept selling the iPhone 4S and iPhone 4 at reduced prices.

The device would use cheaper parts and might be smaller than current iPhone models, people familiar with the plans said.

The firm was also considering a more versatile model that would work on multiple wireless networks, said people who had been briefed on the plans.

Apple has sold more than 270 million iPhones worldwide. The device generated US$80.5 billion in sales last year, accounting for more than half of its revenue.

This article appeared in the South China Morning Post print edition as Apple plans smaller, cheaper iPhone